Why Nine Entertainment’s share price increased today

What Happened to Nine Entertainment’s Share Price?

Shares in TV network Nine Entertainment [ASX:NEC] jumped as much as 15.2% today to the highest level since November last year. The stock price has been volatile over the past 12 months. After peaking around $2.40 in March last year, it fell to around $1.60 in January 2015. It has rebounded strongly over the past months.

Why Did This Happen to NEC Shares?

The rebound in the share price is more about low interest rates than better earnings. Today, NEC announced a 2% fall in revenue and a 6.4% decline in underlying net profit. Despite weaker earnings, the company announced a share buyback, which is typically good for short term share price performance.

What Now for Nine Entertainment?

The Aussie economy is sluggish, which means the advertising market will remain tough for NEC. The share buyback gives the market confidence, as it is an indication that management thinks the stock price is good value and worth buying at these levels. NEC does look like good value, but that reflects the company’s low growth environment. The best investors can hope for is more interest rate juicing pushing stocks higher as investors chase dividend payers. NEC yields a bit under 5%, which is attractive in this low interest rate world.


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Greg Canavan
Greg Canavan is a contributing Editor of Markets and Money and is the foremost authority for retail investors on value investing in Australia. He is a former head of Australasian Research for an Australian asset-management group and has been a regular guest on CNBC, Sky Business’s The Perrett Report and Lateline Business. Greg is also the editor of Crisis & Opportunity, an investment publication designed to help investors profit from companies and stocks that are undervalued on the market. To follow Greg's financial world view more closely you can subscribe to Markets and Money for free here. If you’re already a Markets and Money subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Markets and Money emails. For more on Greg go here.

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